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Lees Foods management buy-out welcomed by experts

By Dan Colombini , 11-Apr-2012
Last updated the 11-Apr-2012 at 17:04 GMT

The directors of Lees are looking to restore the firm to private ownership
The directors of Lees are looking to restore the firm to private ownership

The £5.6M management buy-out of Scottish confectioner Lees Foods and its plans to restore the business to private ownership has been welcomed by city analysts.

Experts confirmed that the proposed sale was advisable given the size of the business and stressed that it was likely to reduce costs in the long-run.

Julian Wild, food group director at law firm Rollits, told FoodManufacture.co.uk: “The business had a sort-out a few years back, which resulted in a change of management. I think they will now look to take it private as it’s not really big enough to be a plc, so I think it would be a good move.

“It would simply be less costly. Lees currently has Alternative Investment Market (AIM) listing and the turnover, which is roughly £20M, is very small for a listed plc. As result, the management probably feel this is the right move to remove the costs of being listed on the AIM.”

Low premium

Despite backing the move, Wild highlighted that the price of the business appeared to come with a low premium, adding that “the offer appears to be roughly the market cap”.

Macaroon bar maker Lees, which also supplies ice-creams to the much-loved Mr Whippy vans, revealed its intention to de-list the firm after confirming the buyout offer from the board of directors yesterday.

The move has already been backed by 41% of the shareholders, who have given the 230p-a-share- buyout an “irrevocable undertaking”.

Chief executive Clive Miquel is leading the takeover, with the other four directors at the firm, under the name Randotte, set up for the express purpose of the acquisition.

Long term interests

A spokesman from Lees said: “The management of Lees Foods believe that the proposal to return the company to private ownership is in the best long term interests of the business.

“We are grateful for the support that we have received from our major shareholders and Lloyds Banking Group for helping us to this stage in the process.”

The buyout will also include the Waverley Biscuit Company, acquired by Lees in 2003 prior to floating on the AIM two years later.

Waverley Bakery, also based in Scotland, makes wafers, nougats and other products for the ice cream industry under the Carousel brand.

Lees at a glance:

  • Ice cream maker since 1908
  • Acquired Waverley Biscuit Company in 2003
  • Floated on the AIM in June 2005